Mutch v ISG Management Pty Ltd

BROMBERG J: 1 These reasons deal with various applications for costs arising from the various interlocutory applications addressed in my reasons for judgment published as Mutch v ISG Management Pty Ltd [2020] FCA 362 ("earlier reasons"). By that judgment the Court dismissed the respondent's ("ISGM") interlocutory application for declassing and class-closure/opt-in orders ("ISGM's declassing application") and two interlocutory applications brought by the applicant ("Mutch") - an interlocutory application for a common fund order ("application for CFO") and an application for summary judgment on ISGM's cross claim ("application for summary judgment"). As indicated in the earlier reasons, I reserved costs in each application and directed the parties to consult on the question of costs and attempt to reach agreement on appropriate consent orders. Disappointingly, no agreement was reached and consequently submissions had been exchanged on the basis that I would deal with any order for costs on the papers. These reasons should be read with my earlier reasons. 2 The interlocutory applications with which these reasons deal were brought in a representative proceeding commenced by Mr Mutch. A key question in that proceeding is whether Mr Mutch and over 3,000 group members, on whose behalf Mr Mutch brings the proceeding, were employees of ISGM or, alternatively, were employees or contractors of various corporations which provided services to ISGM. As well as other relief, Mr Mutch seeks declarations that he was an employee of ISGM and that, contrary to various obligations imposed by the Fair Work Act 2009 (Cth) ("FW Act") and an industrial award made under that Act, ISGM failed to pay or provide him with various employee entitlements. 3 ISGM filed a cross claim, premised on the Court finding (contrary to ISGM's Defence) that Mr Mutch was an employee of ISGM. The cross claim seeks restitution of monies paid by ISGM in relation to work performed by Mr Mutch and damages for misleading and deceptive conduct based on various representations said to have been made by Mr Mutch or a corporation with which he is said to be associated. 4 The proceeding in which these applications for costs have been made is a matter arising under the FW Act. Consequently, s 570 of the FW Act applies to limit the circumstances in which the Court may order a party to pay costs. In each of the interlocutory applications which I have mentioned, each of Mr Mutch and ISGM seek an order for costs. In each case, each of those parties contends that the pre-condition for an order awarding costs required by s 570(2)(b) of the FW Act is made out - namely, that the Court should be satisfied that an "unreasonable act or omission caused" the costs which are claimed. 5 For the reasons which follow, I am not satisfied that the requisite pre-condition of an "unreasonable act or omission" is established in relation to any of the applications for costs. Those applications should be dismissed.

section 570 - relevant principles 6 Section s 570 of the FW Act relevantly provides: Costs only if proceedings instituted vexatiously etc. (1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A. Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A. (2) The party may be ordered to pay the costs only if: (a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or (b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or (c) the court is satisfied of both of the following: (i) the party unreasonably refused to participate in a matter before the FWC; (ii) the matter arose from the same facts as the proceedings. 7 Section 570 imposes a limitation on the circumstances in which an order for costs may be made in relation to a matter arising under the FW Act. One such circumstance is where the Court is satisfied that a party's unreasonable act or omission caused another party to incur costs: s 570(2)(b). The term "unreasonable" in s 570(2)(b) is unsurprisingly not defined. It is a term not conducive to precise definition. The word "unreasonable" is used in s 570(2)(b) to control the extent of the limitation on the making of a costs order sought to be imposed by s 570. The term takes much of its meaning from the underlying reason for that limitation. It is well settled that the limitation imposed by s 570 seeks to provide access to justice by ensuring that the fear of an adverse costs order does not discourage litigants from pursuing good claims: Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ); Ryan v Primesafe [2015] FCA 8 at [64] (Mortimer J); Hutchinson v Comcare (No 2) [2017] FCA 370 at [8] (Bromberg J) ("Hutchinson (No 2)"). As Lee J stated in Bywater v Appco Group Australia Pty Ltd [2019] FCA 799 at [7] that the Fair Work jurisdiction should be primarily a "no costs" jurisdiction reflects "a long standing, underlying legislative intention to ensure access to justice in relation to Fair Work - type matters". 8 With this in mind, the occasions upon which costs will be awarded under s 570 are likely to be exceptional: Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 at [60] (Black CJ, North and Mansfield JJ); Hutchinson (No 2) at [8]. The fact that a party has conducted litigation inefficiently, made late concessions, or adopted a misguided approach will be relevant to, but not conclusive of, the party having acted unreasonably in a sense relevant to s 570(2)(b): Construction, Forestry, Mining and Energy Union v Clark (2008) 170 FCR 574 at [29] (Tamberlin, Gyles and Gilmour JJ); Hutchinson (No 2) at [8]. 9 As Lee J stated in Bywater at [11], the Court retains a discretion as to whether it will award costs, even if the preconditions specified by s 570(2) exist. His Honour referred to Saxena v PPF Asset Management Limited [2011] FCA 395 at [6], where I had remarked, by reference to observations made in Clarke, that "this Court ought to be very careful indeed to exercise the discretion provided by s 570(2) and should not do so other than in a clear case". I also stated that the "limited discretion conferred on the Court by that subsection ought not become the basis for arguments about costs in relation to any and every transgression in the conduct of a case". 10 Lee J in Bywater went on to observe that whilst the facilitation of access to justice is an important consideration, "when it comes to usual inter partes litigation in this jurisdiction, including litigation maintained by industrial organisations" that consideration may have less force when the Court is dealing with a Fair Work proceeding which is funded by a litigation funder seeking to use the process of the Court in order to "conduct an enterprise to derive profit". His Honour repeated those observations in Turner v Tesa Mining (NSW) Pty Ltd [2019] FCA 1644 at [77]. 11 ISGM relied upon those observations in the context of Mr Mutch's proceeding being funded by a litigation funder. 12 The weight to be attached to the presence of a litigation funder was understandably left open by Lee J in Bywater. There may well be circumstances in which an adverse cost order against a party who is funded by a litigation funder will not diminish the facilitation of access to justice which, as Lee J observed in Bywater, is an important consideration in the exercise of the Court's discretion. It should be kept in mind, however, that the legislative policy of facilitating access to justice is of broad application and is not merely concerned with access for the particular litigant in the particular case in which an order for costs is being considered. 13 Whilst litigation funders fund litigation to derive profit, that they do so serves to facilitate access to justice for individuals who may otherwise not have been able to afford the cost of litigating good claims. The activities of litigation funders in funding Fair Work litigation is, in that respect, aligned with the policy objective which underlies s 570 of the FW Act. 14 It would be antithetical to that policy objective if cost orders against litigants who are funded by litigation funders became the rule rather than the exception in Fair Work litigation. If that were so, the willingness of litigation funders to participate in funding Fair Work litigation may diminish and the capacity of prospective litigants to use litigation funders may also diminish because of the higher fees or commissions which litigation funders will likely charge. Further, that adverse cost orders should be more readily available against applicants than respondents conflicts with the scheme of s 570 which is primarily directed to assisting applicants, but in doing so, recognises the importance of an even-handed approach to the question of legal costs. An even-handed approach must have been seen as integral to the broad acceptance of Fair Work litigation as primarily a "no costs" jurisdiction. Carving out exceptions to the even-handed approach taken by s 570 may serve to undermine the regime that s 570 seeks to promote. 15 Taking all of those considerations into account, there is nothing in the facts before me which persuades me that the weight which would ordinarily be given to the important consideration of access to justice should here be diminished.

Isgm's declassing application 16 In support of his application that ISGM should pay his costs of responding to ISGM's unsuccessful declassing application, Mr Mutch asserted that ISGM's application was misconceived. Mr Mutch relied on the rejection of that application and some of the Court's reasoning for having dismissed it. However, all that Mr Mutch's submissions suggest is that ISGM's de-classing application lacked merit. So much may be accepted. The extent to which the application lacked merit is set out in my earlier reasons. Those reasons, and the submissions made by Mr Mutch relying upon them, do not support a conclusion that the application was so devoid of merit to justify the Court being satisfied that the act of making the application was an "unreasonable act" within the meaning of s 570(2)(b).

the cfo Application 17 As stated at [126] to [129] of my earlier reasons, Mr Mutch made an interlocutory application seeking that a common fund order ("CFO") be made in relation to the class action. That application was neither consented to nor opposed by ISGM. At the hearing I raised with Senior Counsel for Mr Mutch the fact that the making of the CFO in this proceeding was not a matter of any urgency and suggested that, given the Court's power to make such orders was under challenge in the High Court, it would be appropriate that the application not be determined until after the High Court's decision in BMW Australia Limited v Brewster [2019] HCA 45 ("Brewster") was handed down. In accordance with my suggestion the application for a CFO was not further dealt with and was ultimately dismissed in accordance with the holding in Brewster that this Court lacks the power to make a CFO. 18 The CFO application was made by Mr Mutch prior to the judgment in Brewster being published. Prior to that time, the Court regularly made CFOs relying upon the principles established by the Full Court in Money Max Int Pty Ltd v QBE Insurance Group Ltd (2016) 245 FCR 191. 19 It is not uncommon for this Court (or indeed any court) to determine an application seeking the exercise of the Court's power to provide relief whilst that power is under challenge before either the Full Court of this Court or before the High Court. When, in those circumstances, such an application should be determined involves the exercise of the Court's discretion, a discretion which will ordinarily be exercised by reference to a range of relevant considerations. 20 ISGM contended that it was unreasonable for Mr Mutch to press for his CFO application to be dealt with after the High Court reserved its judgment in Brewster. The "unreasonable act" contended for is not the making of the application (which preceded the High Court reserving its judgment) but the pressing of the application thereafter. 21 ISGM's submissions do not demonstrate that any costs were actually incurred by it as a result of Mr Mutch pressing the application. Even if some costs were incurred, it was not "unreasonable", within the meaning of that expression in s 570(2)(b) for Mr Mutch to press for relief in accordance with the law as it stood at that time. That the Court may have exercised its discretion favourably to Mr Mutch was not so glaringly improbable as to render the pressing of that application (to the minimal degree to which it was pressed) an "unreasonable act" within the meaning of s 570(2)(b) of the FW Act.

summary judgment application 22 By this application, Mr Mutch sought the summary dismissal of ISGM's cross claim. As my earlier reasons state (at [139]) I determined that the most appropriate course was for the summary judgment application to be adjourned to a date to be fixed. Given that the summary judgment application has not been determined, it is surprising that any application in relation to costs should be made at this time. Whether the application succeeds or fails is likely to be a relevant consideration in any determination of whether any costs incurred to date should be awarded and to whom. On that basis alone, Mr Mutch is correct to contend that the appropriate order is that the costs of that application be reserved.

adjournment of hearing - costs thrown away 23 Each of the interlocutory applications to which I have already referred were listed to be heard on 20 and 21 August 2019. At the outset of that hearing, ISGM applied for its interlocutory application to be adjourned. The stated basis for that adjournment application was that ISGM sought to adduce additional affidavit evidence to the affidavit evidence already filed, in support of submissions it sought to make that the proceeding be declassed. ISGM's desire to adduce further evidence was responsive to objections made by Mr Mutch as to the admissibility of much of the evidence ISGM had already filed. 24 ISGM's application for an adjournment was resisted by Mr Mutch. However, Mr Mutch contended that if the adjournment application was acceded to, it would be appropriate that his interlocutory applications be also adjourned. 25 On 20 August 2019, I determined that each of the applications listed for hearing on 20 and 21 August 2019 be adjourned to alternative hearing dates. Those applications were ultimately heard on 2 and 3 October 2019. 26 The adjournment of Mr Mutch's applications was consequential upon my decision to adjourn ISGM's application. I do not accept ISGM's contention that costs thrown away by reason of the vacation of the listing for 20 and 21 August 2019 could have been avoided if Mr Mutch had not sought the adjournment of his own interlocutory applications. In my view it was ISGM's adjournment application which caused the vacation of the hearing dates on 20 and 21 August 2019. 27 Mr Mutch contended that the cause of the costs thrown away by the adjournment was ISGM's failure to have prepared and filed its evidence in admissible form prior to the hearing on 20 August 2019. Mr Mutch contended that such a failure was "unreasonable". He submitted that ISGM should pay the price of having applied for and obtained the indulgence of an adjournment to prepare its evidence in admissible form. 28 ISGM contended that the vacation of the hearing was caused by Mr Mutch raising extensive and technical objections to the evidence which it had filed. In particular, ISGM contended that the very late notice of those objections provided by Mr Mutch to ISGM was the reason for ISGM's adjournment application and the consequent adjournment. The late raising of extensive objections was said to be the "unreasonable" act which caused the costs thrown away by ISGM as a result of the adjournment. Mr Mutch denied that the objections raised were either inappropriate or late. 29 In my view, neither party is without fault in relation to the adjourned hearing. However, insofar as either party was at fault, there was not an "unreasonable act" involved which would justify an order for costs being made pursuant to s 570(2)(b). 30 To resolve these competing applications for the costs thrown away, it is necessary first to say something about the nature of the evidence that ISGM sought the opportunity to put before the Court. That evidence was evidence designed to demonstrate the variation in circumstances as between different group members. ISGM sought to demonstrate such variability in support of its position that there was insufficient commonality of relevant circumstances as between group members to raise a common issue (for s 33C purposes) and/or provide utility to justify the proceeding continuing as a class action (for s 33N purposes). Some assertions about the variation in circumstances as between group members were made by ISGM in its Defence. The affidavit evidence which was initially filed by ISGM, as well as the evidence filed to supplement that evidence, was designed to demonstrate by evidence the variations asserted in the Defence as well as to provide evidence to support many other asserted variations in circumstances as between group members. 31 That evidence was ultimately received for a limited purpose. As I stated in my earlier reasons at [56]: Material filed by ISGM (some 12 affidavits) was received for the limited purpose of allowing the Court to gain an understanding of the kind of evidence that may be available to demonstrate the potential for variability as between group members relating to particular indicia that may be relevant to the issue of whether the technicians were employees of ISGM. That material elaborated upon the nature of the variations referred to in the Defence. 32 The nature of the variations in circumstances relied upon by ISGM by reference to that evidence is set out at [57]-[60] of my earlier reasons. The nature or extent of those variations was not put in contest by evidence relied upon by Mr Mutch. Nor did Mr Mutch seek to contest the evidence through the cross examination of the deponents whose affidavits were relied upon by ISGM. Ultimately and on the return of the interlocutory application on 2 October 2019, Mr Mutch did not press the objections to evidence made by him. That occurred after a discussion with the Court addressing the limited basis upon which the Court would receive that evidence. 33 In my view, the real cause of the adjournment and the costs occasioned thereby was the failure of the parties to have either recognised or acknowledged prior to the adjournment on 20 August 2019 that the evidence which ISGM sought to rely upon would likely only be received for the limited purpose for which the evidence was ultimately received. If that had been recognised and acknowledged by ISGM to Mr Mutch, I doubt that Mr Mutch would have either made or pressed the objections that ultimately he did not press. That is because the importance and relevance of the evidentiary objections fell away if the evidence was not to be relied upon to establish as a fact each of the matters that were addressed by the affidavits. Both parties bear responsibility for attaching the importance they each attached to the form of the evidence in question. Whilst that may have involved some errors of judgment, the conduct of neither ISGM nor Mr Mutch constituted an "unreasonable act" within the meaning of s 570(2)(b) of the FW Act. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.